Video streaming apps give the idiot box a run for its money

“This is an industry where players have to make long-term investments to see returns in a few years. For TV players (broadcasters), having an OTT platform is essential to stay in the digital game.” said Ajit Mohan, CEO of HotstarShashwati Shankar&Payal Ganguly | ET Bureau | Updated: December 29, 2016, 09:30 IST

Sahanna Ramesh has cut the cord — the TV cord that is. The 24-year old State Bank of India analyst stays up late every night watching shows on one of four streaming video apps—Hotstar, Sony Liv, Netflix and Amazon Prime Video, the last of which debuted in India on December 14.

“Each of the platforms offer varied content,” Ramesh said. “Through Hotstar, I watch Tamil television shows, Netflix has its own original shows and Amazon Prime Video seems like a really cheap option which will have a lot of diverse content to choose from in a few months.”

Known in the trade as over-the-top (OTT) applications, the four platforms cited above join a field that includes Eros Now, Viacom 18’s Voot and Jio Cinema.

Providing exclusive content calls for investment. Amazon, for instance, is setting aside Rs 2,000 crore for Prime Video in India and has announced 18 original shows for India. Hotstar, Eros Now, Sony Liv and others are likely to have spent at least double this amount since their respective launches, experts said.

“Amazon’s entry into the Indian market is definitely significant and could have an impact on the existing players when it comes to subscriber acquisition in the long run,” said an expert.

He reckons the leading domestic television players would definitely have spent double or even three times the amount Amazon is targeting at the Indian market.

“It’s not the broadcasting channels that will get hit in the long run, they have alternate sources of revenue. It is independent players dependent on venture funds (that will be affected),” he said.

Nitesh Kriplani, Amazon’s country head for video, said the company “will make investments and keep refreshing (its) service every month — every single genre is important to us… It will take a few years of investment and focus on customers need — we are bullish about the India”.

Even as Amazon and broadcast players are expected to invest heavily, Netflix, which started in January, is yet to go full throttle.

Experts estimate the American company has an annual content budget of $3-5 billion across all geographies. “But from what we can see, Netflix isn’t targeting the Indian market in a strong way like Amazon is. Also, Netflix caters to an elite clientele so they will stick to that segment,” said one expert.

According to Ajit Mohan, CEO of Hotstar, in the battle for viewers, pricing and content will play a key role. The OTT player, which launched in February 2015, claims 130 million app downloads.

Hotstar has a freemium model (most content is free) but HBO and other offerings require a monthly fee of Rs 199. “The revenue model is a mix of advertising and subscription based,” Mohan said. “This is an industry where players have to make long-term investments to see returns in a few years. For TV players (broadcasters), having an OTT platform is essential to stay in the digital game.”

Star India-owned Hotstar, Sony Liv, Eros Now and Viacom18' s Voot are all part of broadcast or entertainment businesses. Some look to compete on price — Zee’s dittoTV charges Rs 20 a month for 100 channels, while Voot is free, focusing on ad-based revenue with 15 million monthly users.

There’s room for innovation on this front. “An interesting business model that could work is one where content is preloaded on the device from providers like telcos and DTH (direct-to-home) services like Tata Sky, Airtel amongst others,” said Jehil Thakkar, media and entertainment head at KPMG.

“End users will buy the device which will already have the service prevalent in the phone, so while the user presumes they are not exclusively paying for the service, while watching shows on the platform, they are consuming data and that’s how these players make their revenue.”